Which Country Will Follow El Salvador and Make Bitcoin a Legal Tender?

See also: ¿Qué país seguirá a El Salvador y convertirá al Bitcoin en una moneda de curso legal?

Last month, El Salvador made Bitcoin an official currency in the country as the first country in the world. It was a bold move and got a lot of attention from both cryptocurrency enthusiasts and mainstream journalists. Now that Bitcoin is gaining traction around the world, which country will follow El Salvador in its footsteps?

El Salvador was the first one!

El Salvador announced in June 2021 for the first time that it will make Bitcoin its legal tender, and the Bitcoin Law came into effect in September. One of the reasons for El Salvador to push Bitcoin to its legal status came from the fact that a huge percentage of the country’s GDP comes from remittances. According to the World Bank, remittances make as much as a quarter of El Salvador’s GDP.

Besides that, many residents of El Salvador don’t have a bank account. For them, Bitcoin presents an opportunity to minimize or even eliminate otherwise very costly transfer costs and leave more money in the hands of Salvadorans. Also, before El Salvador adopted Bitcoin, the country used the United States dollar as its official currency of which monetary policy it didn’t have a say on.

Paraguay?

Paraguay has been speculated to be a strong contender to follow El Salvador, although it is not in the same monetary situation as El Salvador is, with Paraguay having its own national currency, guarani. Neither does Paraguay rely as much on remittances as El Salvador does, cross-border money transfers being only a few percentage points of the total GDP.

The Paraguayan guarani, however, has been suffering from some volatility and inflation, losing almost 40% of its value against the United States dollar since 2014. Taking also into account the annual inflation rate of the United States dollar, the people in Paraguay have been steadily losing the purchasing power of their currency. With Bitcoin, Paraguayan people would have an option to use a money system with a more sound and predictable monetary policy.

Paraguay also seems to have a beneficial regulatory environment and progressive lawmakers when it comes to Bitcoin. As soon as El Salvador announced its plan in June, lawmakers in Paraguay latched on to the momentum to legalize Bitcoin.

Instead of making Bitcoin a legal tender, the proposed cryptocurrency bill in Paraguay seeks to develop infrastructure around the use and regulation of Bitcoin in the country. Good infrastructure incentives and clear regulations would attract crypto businesses in the country, and after that, the next step to make Bitcoin official wouldn’t be that far away!

Panama?

Back in June, Panama was also piggybacking onto El Salvador’s historic move. Just one day after El Salvador’s bill was passed, Panamanian congressman Gabriel Silva put forward a bill proposal aimed at encouraging the use of cryptocurrencies.

The goal of the legislation is to bring “legal, regulatory, and fiscal certainty to use, holding and issuance of digital value and crypto assets in the Republic of Panama”. The crypto bill in Panama is not going as far with Bitcoin as El Salvador’s did, but it would certainly bring regulatory clarity. Overall, it’s understandable that many other countries want to monitor the situation in El Salvador closely before making any drastic moves.

One motivation for the lawmakers in Panama to draft the cryptocurrency bill is certainly to bring new investments to the country through the benefits the cryptocurrency industry can bring. This could potentially stimulate the Panamanian economy and bring in new jobs. Panama doesn’t have its own national currency but it’s relying on the United States dollar as an official currency, just like what El Salvador was only relying on until quite recently, so maybe going the legal tender way is not that out of the question for Panama in the future!

Ukraine?

With the next country, we’re moving out from Latin America and taking a look at Europe. Many cryptocurrency analysts have set their laser eyes on Latin America when it comes to the next possible country to go the El Salvador route. However, what if the next country will come from Europe? After all, Europe has some interesting countries that could benefit from adopting Bitcoin.

Few weeks ago, Ukraine made some headlines in the cryptocurrency world with its own cryptocurrency bill. The legislation didn’t make such moves as El Salvador did, but still, the crypto law that the Ukraine’s parliament passed is a significant milestone in integrating Bitcoin into the country’s economy.

Unlike El Salvador, Ukraine will not require that Bitcoin be accepted as a method of payment and the law doesn’t plan any efforts to bring Bitcoin as a form of payment. As is the case with the proposed bills in Paraguay and Panama, the goal of the legislation is to clear up the regulatory status of cryptocurrencies so that crypto businesses could be set up in the country.

This would, in turn, attract more investors and prosperity to the country and create more jobs. All this could have a beneficial effect on the country since in the last few years, many talented Ukrainians have been leaving the country in search of better economic opportunities elsewhere.

Although Ukraine is in Europe, it’s not in the European Union. Besides that, the country has been experiencing war and geopolitical tensions in the last few years. Bitcoin, as a neutral protocol, doesn’t discriminate or take any sides. By adopting Bitcoin, Ukraine could gain more leveraging power in the world economy.

Georgia?

Next up, we have Georgia, a country that is not very often on the top of the list when people speculate which country will follow El Salvador in making Bitcoin a legal tender. Georgia is a country of about 4 million people in the Caucasus region, right at the bridge between Europe and Western Asia.

Georgia ticks many of the boxes already discussed in this article. First of all, Georgia has a large unbanked population. According to the World Bank, about 40% of Georgians didn’t have a bank account in 2017. Also, the Georgian currency, lari, is experiencing quite high inflation according to the country’s National Statistics Office. The annual inflation rate, as of writing this article in September 2021, runs at 12.2%.

Another point to consider is remittances. According to World Bank data, approximately 13% of Georgia’s GDP is made of remittances. If we assume that the remittance costs using traditional methods is 5% (which is a moderate estimate), then of the Georgian $2.5 billion remittance volume, $125 million is paid every year by Georgian citizens in remittance fees.

This $125 million can also be expressed in the working time of the population. The average monthly wage in Georgia is about $450, so it would take the population of Georgia 277,777 months to pay the transaction fees of the traditional remittance system.

Laos?

A few weeks ago there was a news story that the office of the prime minister of Laos authorized six companies, including construction companies and a bank to start mining and trading cryptocurrencies in the country.

According to a report, government ministries would now start working together with the central bank and the national power utility to regulate the crypto industry in the country. Interestingly, only in the previous month, the country’s central bank warned banks, companies and people against using cryptocurrencies.

Laos has abundant resources of hydroelectric power and not enough internal demand to use that power, so it would only be logical to use it for Bitcoin mining. Laos differs from many other countries featured in this article in that it’s one of the world’s only one-party socialist states openly endorsing communism. Could a socialist country be the next one to adopt Bitcoin, and therefore also to endorse Bitcoin?

Kosovo?

Kosovo is a country in Southeastern Europe, in the Balkan region, to be precise. Kosovo is a somewhat new country on the map. It unilaterally declared its independence from Serbia in 2008, and still about half of the United Nations member states don’t recognize it.

Interesting thing about Kosovo is that even though it’s not part of the European Union or the eurozone, it still uses the euro as its de facto currency. Sounds familiar? There’s a somewhat similar situation with the United States dollar in Panama and El Salvador, before the Bitcoin Law, of course.